Public Storage upgraded, Extra Space Storage downgraded at Raymond James

Raymond James upgraded Public Storage (NYSE:PSA) to Strong Buy from Market Perform on Thursday as analyst Jonathan Hughes expects the operator of self-storage facilities to sustain its comparatively strong recent revenue growth.

That's because there is "more rent upside after less-aggressive rate increases over the past several years, along with expectations for revenue growth to inflect positively by midyear, likely sooner-than-peers," Hughes wrote in a note.

Another reason for his upgrade includes PSA's attractive valuation, both on an absolute and relative basis, "coupled with sector-leading AFFO growth through 2025."

He also cited "capacity for external growth activity that could be funded with variable rate debt – a good thing if we see continued declining inflation/interest rates."

At the same time, the sell-side analyst downgraded fellow self-storage REIT Extra Space Storage (NYSE:EXR) to Outperform from Strong Buy, as the stock is "now a heavy overweight name among the group, which does present some risks if fundamentals disappoint."

He does remain constructive on EXR, the note said, given strong AFFO growth through 2025 "that could be conservative if LSI merger synergies are realized sooner-than-expected," as well as higher exposure to variable rate debt.

In premarket trading, PSA inched up 0.2%, while EXR slipped 0.5%.

SA's Peer tab compares numerous metrics of EXR and PSA.